Memecoins Are Akin to Collectibles According to SEC

The U.S. SEC clarifies that memecoins are not securities under the Securities Act of 1933.

Under the new administration, the Securities and Exchange Commission (SEC) has provided clarity for various crypto assets. In the latest move, the agency has clarified the ‘securities’ status of memecoins.

According to the SEC, memecoins are more like collectibles than securities. The SEC staff stated:
> “Memecoins are akin to collectible and the assets have limited or no use or functionality.”

This indicates that memecoins derive their value from community hype and cultural appeal, rather than fundamental utility. Unlike crypto assets such as Bitcoin, which have broad applicability, memecoins are largely speculative and not seen as serious investments.

Why are Memecoins Not Securities?

With the SEC ruling memecoins are like collectibles, the commission made it clear that they cannot be treated as securities. According to the SEC’s statement, memecoins do not meet the criteria of the Securities Act of 1933 as they do not provide rights to future income, profits, or assets, a key characteristic in determining if an asset is a security.

Thus, memecoins’ value is mainly driven by market speculation and social hype. Because they fall outside the securities definition, issuers and traders do not need to register transactions with the SEC, leading to no protections under securities laws for buyers and holders. However, fraudulent conduct remains subject to federal or state prosecution.

U.S. Bill Restricting Politicians and State Officials

While the SEC provided legal clarity on memecoins, lawmakers are crafting a bill to prevent politicians from offering them. The Modern Emoluments and Malfeasance Enforcement (MEME) Act aims to restrict public officials, including the president and their families, from launching, endorsing, or offering a memecoin.

This follows the controversial launch of Official Trump [TRUMP] and Official Melania Meme [MELANIA] coins, both of which have seen significant losses. The Trump memecoin, for instance, has declined 59.8% in a month, with its market cap shrinking from $5 billion to $2.2 billion. Under this bill, all public officials would be prohibited from engaging with memecoins, with Rep. Sam Liccardo accusing Trump and his family of criminal activities by enticing investors for personal gains.

What this SEC Statement Means for Crypto

The SEC’s legal clarity regarding memecoins is a critical moment for the crypto market. This guidance provides crypto exchanges, developers, and holders with a clear route forward, fostering a healthier environment that may encourage significant players to participate in memecoin markets. Typically, the entry of major players can revitalize struggling memecoins, which have recently faced declines, with market cap dropping by 44.67% to $56 billion.